MarketSmith Blue Dot Scan

These healthcare stocks are on the MarketSmith Blue Dot Scan this week, as their relative strength line makes new highs. All three stocks are a carry over from previous watchlists, as the bullish trend continues.

Summary

Abbvie (ABBV), Eli Lilly (LLY), and Mckesson Corp. (MCK) are discussed below.

Relative Strength Blue Dot Scan

Stocks make the MarketSmith RS Line Blue Dot list when they satisfy two criteria:

First, they’ve hit a 52-week high in their Relative Strength line. This is where you’ll notice a translucent blue dot appear on the Relative Strength line of the stock’s chart.

Second, the stock is currently building a base. If both of these conditions occur, the stock goes on the list for 90 days. You can access the list by clicking on the “Open Stock Ideas” button in the top-right corner on any MarketSmith chart.

Abbvie Blue Dot

AbbVie (ABBV) earned a 94 Composite Rating, while its Relative Strength (RS) line rose to 96 on Thursday.

This metric tracks a stocks relative strength to the benchmark S&P 500.

The improvement in relative strength is something to watch in the next few weeks as the stock attempts a breakout in the short-term.The stock is constructing what may become the right side of a cup base. Abbvie price action is still trading 13% below its 52-week highs.

Chicago-based AbbVie is our large cap pharmaceutical candidate, giving us exceptional exposure to healthcare, immunology, cancer, and virology.

Eli Lilly Blue Dot

Eli Lilly (LLY) caught an upgrade to its Relative Strength (RS) Line this week, rising from 94 to 97. This important metric is something we look for in the best stocks to trade or add to our portfolios.

The RS Rating tracks a stock’s share price performance over the last 52 weeks, and then compares the result to that of all other stocks. The rating shows clearly if the stock is a market leader or laggard in terms of price performance.

Eli Lilly (LLY) discovers, develops, manufactures, and sells human pharmaceutical products and animal health products.

In its latest earnings report company revenue grew 14.8% on a year-over-year basis. In addition, Eli Lilly earnings growth eclipsed 63% ($1.61 vs. $2.62) while sales are growing at a respectable 16%.

Click to enlarge chart.

Eli Lilly gapped up a week ago, trading this week at new highs after retaking its 50-day moving average last Wednesday 06-22-2022. Shares are trading inside the buy zone for the last five days, from 313.00 up to 329.81.

We’ll most likely add on a move above 329.91, 10 cents above the pivot high, that occurs on above average volume.

Mckesson Blue Dot

McKesson (MCK) is currently 4% from a new buy point at 340.04 in a near three weeks tight flat base.

The company also announced a joint venture with HCA Healthcare (HCA) today, with the two companies pursuing oncology research.

Investors Business Daily also added McKesson to its IBD Big Cap 20 list of top-rated large cap stocks.

As institutions accumulate shares in healthcare stocks, our three candidates will most likely follow though over the next few weeks. Volume has been above average as well, while price action builds and RS lines rise to 96 or better.

Finally, the healthcare sector has been particularly strong, as fear grips the markets and investors search for protection in defensive sectors.

Look for these stocks to continue.

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Happy Trading,

Vinny

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